After Michelle Politano was laid off when the COVID-19 pandemic arrived last year, she made the decision to pursue her lifelong dream of opening a food business.
“I’m not a risk-taker, but life is short,” said Politano, who added that the loss of her job in the travel industry led to some introspection about her career. “It was kind of this aha moment. I raised the question: What do I want? Is this the time to make that jump?”
Politano jumped, opening a vegan restaurant, Pianta LLC, in Providence in April.
Many others have jumped into opening businesses, too. Despite the public health crisis that crippled the economy, Rhode Island saw a record number of business starts in 2020 – a time that also saw a record number of business closures.
The R.I. Department of State recorded 10,533 new business filings last year, the first time the state has had more than 10,000 filings in a single year. And the deluge of new businesses has continued into the first quarter of 2021, with 3,585 new filings from January through March, which is a 43% increase from the 2,511 new business filings for the same period in 2020.
“You would think that in a pandemic it would be debilitating, but it hasn’t been,” said Secretary of State Nellie M. Gorbea.
Why?
Edward M. Mazze, a University of Rhode Island distinguished professor of business administration, said the move by many people to establish businesses of their own is driven by an unprecedented stay-at-home economy, leading to increased internet activity and sparking a shift in consumer behavior.
‘Now I am trying to figure out how to become profitable.’
MEGAN McCUTCHEON, Newport Needlepoint LLC owner
“It shows a certain optimism about the future in terms of the overall economy,” said Mazze. “It’s built on the notion that people want to become the masters of their destinies.”
Megan McCutcheon acknowledged that she had no idea what she was doing when starting her business, Newport Needlepoint LLC, which she said began as a distraction, then a hobby, before filing articles of incorporation through the secretary of state’s website last year.
“I had a lot of extra time at home during the lockdown, so I had time to devote to a hobby – needlepoint,” said McCutcheon, who is also a marketing director for a company that produces COVID-19 tests.
She now operates a website – newportneedlepoint.com – and has Facebook and Instagram pages for the company. She sells needlepoint products such as bracelets, headbands and cuffs.
“I realized I had a lot of fun designing patterns and coming up with product ideas,” said McCutcheon, who has been doing needlepoint for 15 years. “I also noticed a gap in the market for fashion-forward finished needlepoint goods, so the business idea was born.”
McCutcheon said it was reassuring to find free information about starting a business on the internet, including connecting with a volunteer mentor from the Service Corps of Retired Executives.
“Now I am trying to figure out how to become profitable,” she said.
While the internet has made it easier to start a business, it hasn’t eliminated the risk.
Mazze noted that about 60% to 70% of businesses fail within two years, and 80% fail in about four years. The reasons range from a lack of funds to no market for products or services.
The pandemic has taken its toll. In 2020, the state saw the largest number of business closures in its history. State records show that 1,721 businesses dissolved last year, up from 1,379 the year before.
Chris Costa said he was hesitant about leasing office space to fully launch his business in December. Costa operates Chris Costa Media LLC, a Pawtucket-based video production company, an industry that he has been working in for about 14 years.
“It was a bit risky,” he said. “Luckily, I don’t have any employees that I have to worry about. That is one thing that helped me stay afloat … I am such a small operation.”
At first, business was slow because of the crisis, Costa said. But the increased use of remote technology gave him a boost. “It’s because I do video production and marketing, and I think people are using video more now than ever,” said Costa.
Costa received a $2,500 Paycheck Protection Program loan that enabled him to lease his office space, which he felt legitimized his business. He had previously been working from home.
“That was a big financial commitment for me,” Costa said. “So the first few months that I was busy, I was still a little skeptical because of the pandemic.
“I was pleasantly surprised,” said Costa. “Through all the bad things that have happened, one of the good things is that we are reworking the way that people are doing business.”
Politano said that starting her restaurant meant taking a giant leap of faith during the unlikeliest of times.
“The whole thing was scary,” she said. “I never thought starting my own business was realistic because I never knew how I could take the pay cut to get started in the industry and maintain my life paying a mortgage and other things.”
Politano said she had received positive feedback about her cooking after delivering food to her family during the pandemic. She reached out to her aunt and a mentor for advice, leading her to sell her house, move to Providence and open a takeout-only operation in a 200-square-foot “cloud kitchen” on Bath Street. She has five employees.
The goal now is to open a cafe.
“It’s always been the dream, but I never thought I’d be able to actualize it,” she said. “So I’m over the moon to be where I am at right now.”
Cassius Shuman is a PBN staff writer. Email him at Shuman@PBN.com.